New rules under the Petroleum Industry Act compel operators to develop oil blocks or surrender them, as regulators push to unlock dormant assets and boost exploration…..
The Nigerian Upstream Petroleum Regulatory Commission has declared an end to the long-standing practice of oil companies holding exploration licences for years without developing them, saying new provisions under the Petroleum Industry Act now compel operators to either develop their fields or relinquish them.
The Commission Chief Executive, Oritsemeyiwa Eyesan, disclosed this while receiving a delegation from the Petroleum Directorate of Sierra Leone at the commission’s headquarters in Abuja.
According to Eyesan, the introduction of the “drill or drop” rule under Section 94 of the Petroleum Industry Act has fundamentally changed how exploration licences are managed in Nigeria, ending a decades-old trend where companies retained oil blocks without undertaking meaningful exploration work.
She explained that under the new framework, operators must begin exploration and development activities within a specified period or surrender the licence back to the government.
“One of the strengths of the PIA is the ‘drill or drop’ provision, which compels operators to either commence work or relinquish the licence,” Eyesan said. “In the past, some operators held licences for as long as 20 years without developing the assets. That era is now over.”
The reform, she noted, has helped return previously dormant assets to the government’s portfolio, creating fresh opportunities for investors interested in Nigeria’s upstream petroleum sector.
Eyesan also expressed satisfaction with the level of participation recorded in the country’s 2025 oil licensing round, describing the number of applicants so far as encouraging despite stricter bidding requirements introduced by the regulator.
The ongoing licensing exercise offers 50 oil and gas blocks located across several sedimentary basins, including the Niger Delta, Anambra Basin, Bida Basin, Benue Trough, and the Chad Basin.
According to Eyesan, the strong investor response has been recorded despite a rule restricting companies to bidding for a maximum of two blocks, whether individually or as part of a consortium.
“For the 2025 licensing round, we have 50 oil blocks on offer. The outcome of the pre-qualification submissions shows there is a strong appetite among investors for the bid round,” she said.
She explained that the limit on the number of blocks was deliberately introduced to prevent companies from hoarding assets and to ensure broader participation by investors genuinely prepared to develop the fields.
To further strengthen transparency in the bidding process, Eyesan said the commission partnered with an independent audit firm to review and validate the digital system used for the licensing round.
According to her, the audit is intended to assure investors that the bidding platform is secure and transparent, with the results expected to be made public.
Beyond improving transparency, the regulator believes the reforms introduced by the Petroleum Industry Act have helped restore confidence in Nigeria’s oil and gas sector, which has faced years of declining exploration activity.
Nigeria holds some of the largest hydrocarbon reserves in Africa, but upstream investment slowed in recent years due to regulatory uncertainty, security concerns and the growing global push toward cleaner energy.
However, the passage of the Petroleum Industry Act in 2021 introduced new fiscal terms and regulatory structures designed to attract fresh investment and improve accountability across the sector.
Meanwhile, Foday Mansaray, Director-General of the Petroleum Directorate of Sierra Leone, said his country was keen to learn from Nigeria’s regulatory experience as it develops its own hydrocarbon industry.
Mansaray explained that the visit by the Sierra Leonean delegation was aimed at strengthening bilateral cooperation and gaining insights into Nigeria’s petroleum governance framework.
“We are here to collaborate with the NUPRC and learn from Nigeria, our big brothers in the industry,” he said, noting that his country hopes to build stronger regulatory capacity as it expands its petroleum sector.
He also proposed deeper energy cooperation between both countries, including the possibility of signing a Memorandum of Understanding to formalise collaboration in regulatory development and capacity building.
Nigeria’s 2025 oil licensing round was formally launched in December 2025 following approval by Bola Ahmed Tinubu, as part of broader efforts to attract new investment into the upstream sector.
The bidding process has already completed the pre-qualification stage, with submissions closing on February 27, 2026. Qualified companies are expected to proceed to the technical and commercial bidding phases before final awards are announced.
The entire process is expected to run for about eight months, concluding in July 2026 with the commercial bid conference and final approvals.
Industry analysts say the success of the licensing round could play a key role in boosting exploration activity, expanding Nigeria’s proven reserves and supporting long-term crude oil production growth.
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